Financial Accounting and Controls

MANAGING AN AUDIT

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Following are suggestions for interacting with auditors, both internal and external. These suggestions are not meant to restrict the auditors in any way, but rather are intended to expedite the audit process while minimizing disruptions to day-to-day departmental operations. Accurate and objective audit findings and conclusions are important to both the auditors and the departments.


Planning

Designate an audit liaison person for your department or unit. In most cases, the most appropriate person for this role is the department manager. Designate an alternate in case the audit liaison is not available.

Communicate to faculty and staff in your department that if the auditors contact them directly, they should immediately notify your department audit liaison.

Contacts

The Controller's Office is responsible for coordination of all campus audits conducted by external auditors. We have extensive audit experience and want to help you work successfully with the auditors. If you are contacted by an external auditor, please immediately notify the Controller's Office:

External Audits – Contracts and Grants Accounting

Kimberly Page, Contracts and Grants Accounting Manager
Telephone: (510) 664-7782
Email: kimberlypage@berkeley.edu

Elizabeth Chavez, Contracts and Grants Accounting Manager
Telephone: (510) 642-1400
Email: elizdchavez@berkeley.edu

Other External Financial Audits

Delphine Regalia, Assistant Vice Chancellor and Controller
Telephone: (510) 642-3881
Email: dmregalia@berkeley.edu

Entrance Conference

  1. Schedule the entrance conference so that the Controller's Office contact can attend.
  2. Demonstrate a positive attitude.
  3. Have the auditor explain why your department was selected for an audit.
  4. Clarify the audit objective and scope (areas to be tested and period covered).
  5. Understand the audit process.
  6. Understand the reporting process and determine who will receive audit reports.
  7. Determine staffing and space requirements.
  8. Identify the timelines for the beginning and end of fieldwork, report date, etc.
  9. Identify contacts in the external auditor's office.
  10. Consider giving the auditor a tour of your facilities.

Access to Records by the Auditor

  1. Obtain a list of requested records.
  2. Pull records and provide them to the auditors. Do not provide records that are not relevant.
  3. Review records you are providing to anticipate questions. If a record may appear harmful to the University's interest, notify your department management (and the Controller's Office contact for external audits) of the possible issue.
  4. Ensure original documents do not leave department premises without prior approval. Make copies of any documents leaving department premises.
  5. If a request is ambiguous, ask the auditor to describe the purpose for selecting the document for review. Be prepared to recommend alternate documents that would achieve the auditor's purpose.
  6. Unless absolutely necessary, do not allow full access to your file drawers, storerooms, etc. Auditors are expected to obtain permission and state their objective for accessing these areas.
  7. Communicate the reasons for any significant delays in providing records.
  8. Have documents available upon the auditor's arrival. Subsequent requests should be handled as soon as possible.
  9. Maintain a list of records provided to the auditor. Ensure all records are returned at the completion of audit fieldwork.

During the Audit Fieldwork

The department audit liaison should:

  1. Keep the audit focused.
  2. Facilitate the audit.
  3. Keep in constant communication with the auditor.
  4. Resolve audit issues as soon as they are brought to the department's attention.
  5. Keep all parties informed on the progress of the audit.
  6. Keep the Controller's Office informed on the progress of an external audit.

Audit of a Specific Transaction

  1. Limit conversation to the transaction in question.
  2. Explain how the transaction benefited the grant, activity or budget.
  3. Explain how the transaction was identified to the grant, activity or budget.
  4. Do not bring in funding issues or departmental politics.

Do's and Don'ts for Interacting with Auditors

Do's
  1. Be honest and open.
  2. Recognize they may be experts.
  3. Realize they may not be subject matter experts.
  4. Understand the purpose of the meeting and review related records prior to interviews.
  5. Listen carefully and understand each question before answering. Be sure responses are complete and accurate.
  6. Respond only to the question asked – keep answer simple and direct.
  7. Weigh answers carefully, being certain you have the facts to back them up.
  8. Limit comments to areas where you have "first-hand" knowledge.
Don'ts
  1. Do not speculate or answer hypothetical questions.
  2. Do not agree or disagree with opinions.
  3. Do not "ramble" or provide irrelevant information (such as office gossip).
  4. Do not get offended by WHY questions.
  5. Do not sign anything on behalf of the University.

Responding to Audit Findings

  1. Keep informed of issues throughout the audit.
  2. Ensure an exit conference is held. Use it to verify facts and respond to the audit. Ask a representative from the Controller's Office to attend.
  3. Ask for time to review findings, and then re-verify calculations and source data.
  4. Concede valid findings, but do not speculate on whether they apply to other areas on campus.
  5. Take immediate corrective action and resolve the issues before they are put in writing.
  6. Discuss with the auditor the disposition of audit issues, i.e., verbal comment, exit item, management summary or report item. The disposition of the issues is based upon several factors.
  7. If necessary, appeal the auditor's conclusion with their supervisors. For external audits, this action should be coordinated with the Controller's Office.

Responding to the Audit Report

  1. Ask to review the draft report.
  2. Provide a management response, which should include:
    • Whether you agree or disagree with the finding
    • Corrective action plan
    • Target date for implementation
  3. Understand the audit follow-up process.
  4. For external audits, consult with the Controller's Office prior to finalizing a response.